Dáil Éireann Debate, Wednesday - 7 May 2014
103. Deputy Clare Daly asked the Minister for Public Expenditure and Reform if he will review the procurement policies of Departments which have resulted in a scenario whereby 28% of Government procurement goes outside the country as opposed to the EU average of 1% as a result of the fact that price-led criteria and centralised buying have become a focus. [20404/14]
View answerI should point out at the outset that no such policies exist whereby a percentage of public contracts are awarded to foreign companies. Contracts are awarded following a competitive process conducted in compliance with the established procurement rules and procedures.
Under EU Directives on public procurement public works, supplies and service contracts above certain thresholds must be advertised on the Official Journal of the EU and awarded on the basis of objective and non-restrictive criteria. For works contracts the threshold is €5.186 million; for supplies and service contracts awarded by Government Departments the threshold is €134,000 and for the remainder of public bodies the threshold is €207,000. The threshold for supplies and service contracts of entities operating in utility sectors (water, energy, transport and postal) is €414,000. For contracts below these thresholds, the general requirement is that they be advertised on the national public procurement website www.etenders.gov.ie or, depending on value, awarded on the basis of a competitive process of direct invitation to an adequate number of suitable suppliers.
The aim of these European rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money. It would be a breach of the rules for a public body to favour or discriminate against particular candidates on grounds of nationality and there are legal remedies which may be used against any public body infringing these rules
The Office of Government Procurement (OGP) is responsible for producing annual statistical information in relation to above-EU threshold procurement activity by the Irish public sector and for providing these statistics to the European Commission. The EU average for cross border activity in relation to above threshold procurements is 1.4%. I am informed that the figure of 28% is not based on OGP data. The following information has been compiled by the OGP and is based on data available on above EU threshold awards:
- In 2011, 10.55% (valued at €240 million) of the total known awarded contracts above threshold by the State went to non-domestic companies. This represents less than 5% of the overall annual public procurement spend (approximately €13.1 billion). I am advised by the OGP that more up to date data on above EU threshold contracts for 2012 and 2013 will be available later this year;
- Analysis of cross border procurement by country, carried out by the EU Commission in 2012, shows that small countries tend to award more cross border contracts (the range is between 5 and 15% in 2011). The comparable figure for Ireland is 10.55%. In Ireland's case the reasons for this level of cross border procurement would include:
- There are a significant number of procurement categories which are not supplied locally (i.e. fuel, vehicles, heavy machinery, pharmaceuticals, IT and certain telecommunications equipment);
- The fact that the vast majority of public procurement opportunities in Ireland are advertised in the English language makes our tender documents accessible to an increasing number of economic operators across Europe, for whom English is the preferred second language;
In terms of the overall data, the UK, France, Spain, Germany, Poland and Italy are responsible for about three quarters of all EU public procurement, both in number of contracts and in value. This distorts the average figure in favour of large economies that have natural resources and heavy industry base capable of meeting the majority of their national public procurement needs.
It is important to remember that open tendering is a two way street and that it provides Irish companies with opportunities to compete abroad. The public procurement market in the EU is estimated to be valued in excess of €2.4 trillion. In this regard, it is worth pointing out that the open market regime offers opportunities for Irish companies to win business abroad and reliable EU studies indicate that many Irish businesses are successful in this regard.
